Hero MotoCorp Forms Joint-Venture with Magneti Marelli

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Once upon a time, Hero MotoCorp was Hero Honda, with the Indian brand relying on its Japanese counterpart to provide the technology that then went into the partnership’s emerging market motorcycles. The joint-venture was a stepping stone for Honda to launch into India, and for Hero it was a quick way to gain marketshare in its lucrative domestic market.

Fast-forward to present day, and Hero has not only become Hero MotoCorp, but it has also become the largest motorcycle manufacturer in India. Honda is a stand alone brand in India now, and trails only Hero MotoCorp with its motorcycle sales volume in India.

To maintain its position at the domestic leader, Hero MotoCorp has had to rely on replacing its technical partnership with Honda by forging alliances with various other brands around the world. Perhaps the most famous of these partnerships is the one with Erik Buell Racing, which includes the Indian brand sponsoring the American company’s racing efforts, and owning a sizable 49.2 % chunk of Erik Buell Racing’s private corporate stock.

Add a new brand to the list now though, as Hero MotoCorp has formed a joint-venture with the Italian electronics wizards at Magneti Marelli. There are bonus points for good timing as well, as the news comes just a few weeks before Hero MotoCorp is to be completely free of Honda’s technology.

The joint-venture sees the creation of a new company: HMC-MM Auto Ltd, which Hero MotoCorp owns a 60% of, while Magneti Marelli owns the remaining 40%. The companies are initially investing $8.5 million into HMC-MM, and plant to bring that total to $27 million by 2024.

With electronic systems becoming more and more an integral part to motorcycle design, the joint-venture should help Hero MotoCorp compete with the engineering prowess of Honda. A pressure that other Indian manufacturers will surely feel, HMC-MM says it will provide technology to other Indian brands, not just Hero MotoCorp.

The move is a win/win for Hero, as it will help smaller brands challenge Honda’s growing presence in India, as well as provide an extra revenue stream for Hero MotoCorp. Considering how hot the Indian market is right now, it is hard to fathom the competition heating up any further, but it is.

Source: Bike Advice